DALLAS -- The Texas Higher Education Coordinating Board today is expected to get state approval to sell a $75 million revenue issue next month -- its first deal not backed by the state's general obligation pledge.

Because the student loan bonds will not use the state's double-A rating, the board plans to include a $2.2 million nonrated junior lien offering to bolster the stand-alone credit structure.

"It has to stand totally on its own," said Mack Adams, assistant commissioner for the board. "As far as we know, this will be a one-time revenue bond issue."

The Texas Bond Review Board today is expected to approve the revenue bonds, which were authorized by the Legislature because strong demand for college loans exhausted the last voter-approved GO authorization in January.

Lawmakers also approved a constitutional amendment that would authorize an additional $300 million of general obligation bonds if approved by Texans this November.

Even though all the authority's previous bond issues have been self-supporting, they have been Texas general obligations bearing the state's double-A rating. The authority is seeking a rating only from Moody's Investors Service and expects the issue to be assigned an A rating.

"We still hope for a double-A," said Mr. Adams. "That would be great, but a single-A would be all right."

In order to secure a higher bond rating, the coordinating board will issue two series of bonds. Senior debt totaling $72.8 million will fund the loan program and $2.2 million of nonrated junior lien bonds will be sold to create a reserve and pay issuance costs.

The new issue will also be the first structured so that the loan portfolio can be sold. The bond resolutions of outstanding issues prevent them from being sold.

Tom Pollard, executive director of the Bond Review Board, said yesterday that his five-member board had hoped a sale of the portfolios would eliminate the need for the $75 million revenue issue.

When it became apparent that it would not, the board asked the agency to structure future deals for possible sales to the Student Loan Marketing Association.

In a summary report on the bond issue, the review board notes that the student loan bonds use a large portion of Texas' $852.9 million private-activity bond allocation.

"If the board could sell its loan portfolio to [Sallie Mae], the proceeds could be reloaned and a considerable draw on the state private activity bond ceiling would be eliminated," the report says.

In 1991, the Texas Higher Education Coordinating Board had an allocation of $100 million. It used 25 million of that in January with the issuance of the last of its college-saver bond program.

Also, lawmakers this spring modified the volume cap allocation process to guarantee that the student loan agency could use its entire allocation.

Previously, only the Texas Housing Agency was exempted from a provision that allowed issuers up to $50 million of their total authorization before Sept. 1 of each year. As a result, any allocation above that level was distributed under a lottery system.

Because demand is nearly double the volume cap, Mr. Pollard said the state wants to reduce the use of private-activity bonds by state issuers when possible.

Also, the Bond Review Board is conducting a study about whether the private-activity bond allocation process should be changed. The board expects to hold a public hearing in July.

"We want to use as little of the volume cap as possible," Mr. Pollard said.

The bond counsel for the student loan authority said it could be years before the authority would not require a volume cap allocation to fund its loan program if portfolios are sold.

"You're looking down the road," said Hobby McCall, a partner at McCall, Parkhurst & Horton in Dallas. "You couldn't use [the proceeds] for new loans right away.

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